Recession. It’s only just been announced, but the reality is far more troubling. South Africans have already been feeling the recession for a long, long time. The people are getting poorer. The cost of living has increased while income stays the same and unemployment rises like a great tide.
As South Africa nears the end of the third quarter, we find ourselves sitting at R15.17 to the US Dollar and facing a technical recession. Consumers are tightening their pockets, the price of fuel continues to intensify and President Ramaphosa is beginning to feel the heat. Ramaphosa, however, refuses to accept that the country has entered an economic recession.
The President has called for citizens to remain calm and weather the storm – better days are ahead. At the moment, South Africa is trying to rectify the damaging effects of the weak governance, nepotism and corruption experienced at the hands of Jacob Zuma – while simultaneously dealing with poor performance in the agricultural sector due to late rains and other factors which are out of our control, such as the weakening of the rand and the rise in price of global crude oil.
Economists, on the other hand, aren’t as confident. Let’s take a look at how this recession impacts us.
Ramaphosa has found himself in a tough position, but nobody thought for a second that succeeding Zuma would be easy. How do we build on rubble? Not only is he dealing with the National Health Insurance and Land Reform headaches, but elections are just around the corner and he’s got to start delivering on his promises in a hurry. This includes securing a lot of foreign investment.
Let’s add to that. The unemployment rate is on the rise – hitting 27.2% in the second quarter of 2018. The future of manufacturing looks bleak, with activity in the sector dipping to its lowest level in thirteen months. The oil price continues its steady upward march, the rand continues to fall – now at its weakest since 2016. State-owned enterprises such as SAA, SABC and Eskom are drowning in debt, putting more and more strain on the Treasury as we continue to bail them out on the taxpayer’s dime.
Oh, and Zuma and company are allegedly concocting a scheme to oust Ramaphosa as President.
Fun and games in the Rainbow Nation.
Ramaphosa has only recently returned from a trip to China, in which several trade agreements were secured. The visit also saw South Africa strike a trade investment deal with the Bank of China to the tune of R15.24 billion.
Despite that bit of good news, economists aren’t buying into Ramaphosa’s call for calm and composure, and many more have criticised his recession-denial. It’s not quite time for hysteria, but serenity isn’t going to solve the problem.
Economists are pretty much divided on the recession topic. Some, such as Professor Bonke Dumisa, have agreed with Ramaphosa in that South Africans need not worry about the current recession.
Others have disagreed with the President. Dawie Roodt, for one, has said that it was wrong for Ramaphosa to say that we’re not really in a recession. He defined a recession quite simply as a slowdown in economic activity, and said that if South Africans are growing poorer, and times are becoming more and more difficult, then it means that we’re in a recession.
Issues such as the rand or fuel price, influenced by external factors, can only have so much of an impact. The majority of our problems, in South Africa, are entirely self-inflicted, and we can blame our woes on the endless list of government shortcomings.
Further still, the DA National Spokesperson, Solly Malatsi, has said that even though Ramaphosa has called for calm, these assurances of a brighter economic future don’t do anything to rectify the unemployment, investor confidence or quality of life issues that South Africa is currently facing.
DA leader, Mmusi Maimane, agrees with Roodt in that SA’s economic turmoil is entirely home-grown.
Speaking to the media earlier this week, Maimane blamed the mayhem on Zuma’s mismanagement and terrible policies, and suggested the following decisive steps be taken in order to lift us out of recession before further damage can be done.
Maimane believes that the above will nip growing economic uncertainty in the bud and signify true change.